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tv   The Kudlow Report  CNBC  March 9, 2010 7:00pm-8:00pm EST

7:00 pm tempur-pedic. the most highly recommended bed in america. tonight on the kudlow report on the fist anniversary of the best bull market in 75 years we peer into the future of a possible second bull market year. but it could be a battle royale between strong profits that are the mother's milk of stocks and rising taxes that are the bane
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of stocks. a bipartisan house coalition wants to cut congressional pay for the first time in 77 years. good on them. but what about federal workers' pay that is 55% higher than private workers with a lot more job security? that is an outrage. that has to be changed. plus, a senate financial regulation deal is cooking, but it doesn't look like it will solve too big to fail by sending failed banks into bankruptcy court. that's the real free market solution. and cisco says they have a powerful router to change the internet forever. it's a great example of another american technology innovation. fasten your seat belts. "the kudlow report" begins right now. good evening, everyone. i'm larry kudlow. welcome back to "the kudlow report" where we believe free
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market capitalism is still the best path to prosperity. all right. let's begin with my money politics message on the anniversary of a record-breaking stock surge, the best in 75 years, as you know. we have to debate this question. are we headed for a second year of the bull market or not? it's a battle royale between rising corporate profits which are the mother's milk of stocks, business and economic growth, versus high tax policies coming out of washington including capital gains, dividends, top earners, banks, foreign earnings and financial transactions. a miserable list of tax hikes. then, of course, there is obamacare with the high tax and spend and regulatory burdens to control almost 20% of the economy. my pal jim cramer says the passage of obamacare could damage the bull market. jimmy makes an important point. it's an important warning with which i agree and you have heard me say this many times on this
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program. so the big question is can the profit surge coupled with an accommodating fed overcome the tax surge? can king profits beat king tax hikes? can big government versus the free market or will there be political regime change? and maybe obamacare defeat which would bolster the free market and encourage more investment in stocks, new businesses and in new jobs. i think this is the key debate that a faces the investor class. short term i like stocks but longer term this is a very open and difficult debate. now, later in the program we'll take a look at the new high tech innovation from cisco in the form of a powerful router that has 12 times the capacity of cisco's closest competitor nd, get this, could download the entire library of congress in a second. this is a wonderful example of american ingenuity, but folks, we should reward it not punish
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it. think about that. and we should punish failed banks, not reward them. and we should reduce excessive government pay intentions to bring those -- pay and pensions to bring workers in line with the gigantic set-back suffered by the private sector workforce. if we did that, it could reduce tax burden. these are some of the key points we must talk about this evening. all right? so to get reaction let's go to our distinguished investment people to look at the second year bull market possibility. we have ken hedner and ron krifshesky. we are all famed on this show. you heard me in the editorial message. i posed this conundrum between big profits and big tax threats. ken, you first.
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how do you see it, my friend? >> i think -- let's talk about big of profits. uh think the s&p will earn more than $90 next year. so at 1,140 the s&p ant that expensive. it's where you're going not where you were. clearly if the capital gains tax rate goes up too much there's going to be incentive for people to sell at the end of the year knowing they have a much higher tax in 2011 on their capital gains. but we don't know what's going to happen at this point. i think the administration is going to be well aware of that and that may cause them to go slow when raising long-term capital gains rate. >> you know, the $90. i agree about capital gains and i'm going to wonder out loud whether some people aren't already moving a lot of income and investments into 2010 which is great for the stock market, but obviously that comes out of 2011 when they will be sellers to get out of the stock market. so what's good for this year may
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be pretty bad for next year. but before i get to ron i want to ask you about your $90 per share earnings estimate. that's a big number. i was calculating at $80 per share the current s&p is about 14 times earnings, ken. with a discount rate of only 3.7% on the ten-year treasury, that's still pretty powerful for this stock market with an accommodative fed. if you go to $90 per share, ken heebner, i'm going to guess out loud you could look at a 20 or 25% market gain from here. >> well, in the fourth quarter the data i get from isi estimates they are less than $80 in the fourth quarter. i'm saying it will be up 10, 12% and that's conservative. so i think the earnings surprises have been strong all during 2009 and i think they are going to be big in 2010. productivity is growing at record rates. contrary to the negative views you're getting the american economy is shooting a lights-out
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under the circumstances it's confronted with. inflation is low. when you look at the key parts of the economy, retail sales are surprising to the upside. new home sales are picking up. i know some of the recent government numbers have gone the other way. but the numbers i look at say things are getting stronger. so i think we are seeing -- and industrial production is growing at a good clip. the out look is getting strong bier the day. >> ron, you heard ken who has a great track record. my wish, ron, is we had a supply-side administration in congress and washington in which case i would say the dow jones is going to 20,000 in which case 400,000 left wing bloggers would attack me once again. ron, i want to ask you -- this is a battle royale between big taxes and big profits. where do you come out, my friend? >> i agree with you. i think coming to a theater soon to you is an increase in marginal tax rates. you're talking medical tax being applied to capital gains, taxes
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applied medicare to dividends. you know, bull markets -- and i agree with the improved profitability. the bull markets are not borne out of environments where you are increasing marginal tax rates, increasing regulation and interest rates. so, you know, larry, listen. we just celebrated a great year. but from the high of october 2007 to the low, we were down 57%. we are up 70 but still down 27% from when the crisis began. the question is where do we go from here? good question. i think unless we make serious policy changes, you know, favoring supply siders i'm not optimistic about the market. >> all right. i want to read factoids. this is the anniversary. the s&p 500, the broad index. interestingly, i say it to both of you and our viewers. the small cap stocks up 95 or 96%. those are thor more growth sensitive stocks. banks up 150%. the world index, i'm using the
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dow jones total market world global, whatever, up 75%. i mentioned small caps up 95%. transports nearly double up 99%. retailers up 90%. tech up 84%. ron, those are big numbers. the global story looks good. we had a report today china car sales up 55% year on year. emerging market stocks in the past year a double up 99%. to some extent does all of this not signal with considerable clarity at least some kind of global and american economic recovery? >> well, certainly it points to recovery. the question is how robust. the market, we're up 70%. 65% of that occurred by october. we have been trading sideways since october. that's telling you something. it's telling you, you know, there is a lot of uncertainty
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about health care, about financial services reform, about tax policy and about, you know, fiscal irresponsibility in the way we are increasing the deficits. >> i think it's extraordinaire ken that we have done as well as we have done in the face of the threats that ron has just outlined. i think it's extraordinary and i want to ask you to take a moment here. insofar as your investment strategy goes, what would you advise people watching this show? >> i would advise -- i think people -- when you look at where you can put your money today i don't think housing prices are going to go up a lot. if you buy a bond you're going to get the coupon. you run some risk that it could go down. you can put it where it's safe in a money market and get nothing. i think the stock market stands out relative to the alternatives. you have to understand we're pricing stocks in a virtual zero interest rate environment. interest rates may at some point later in the year go up to 2% or 3%, but stocks are worth more
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when there is no other place to put the money. if you're competing with 10% interest rates or worry about 7% or 8% inflation, right now there is virtually no inflation. >> specifically which stocks or areas do you like? >> the stocks i would single out is the most controversial. everyone's down on goldman sachs. the government is criticizing goldman sachs. they are one of the greatest corporations in the world. >> the franchise is strengthened by the disappearance of competitors. they earned in the $32 rate for the december quarter. when the government says, well, you're paying too much, they reduced the bonus compensation. that sends earnings way up. then they say, we're going to be good guys and give the bonuses in stock to the top 30 people. so what you're setting up is here's a company that's going to grow strongly for several years. it's going to earn over $25 next year. so it's seven times the minimum estimate, one of the greatest companies in the world.
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>> and you know since the liberal media hates goldman sachs it's probably a terrific call on your part. probably a wonderful call. i want to can you about another -- ask you about another call. i think you are holding onto the ford recommendation. this is the company that didn't do t.a.r.p. and they are picking up market share. are you still into ford, ken? >> i have to admit that it's good news out here. we see what a great company it is. we see them gaining share, but the positive for ford from here is that we are selling cars at a 10 and a half million light vehicle rate. to maintain the rate we need to do 13.8 million cars. i think the strongest part of the economy in 2010 and 2011 will be in the automotive market. i can see automotive -- light vehicle sales surging 30% in the next 12 months. that will be a big driver for ford's earnings. >> ron, what are you telling investors? >> we like technology, larry. you're going to talk about cisco, so put it this way -- i
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think technology in the great innovation of the american public, if you can download the library of congress in under a second, that's great. the problem will be in we decide to tax the increase in the download speed. >> right. >> next thing you will see is let's tax the increase in the download speed and watch what happens to innovation. >> wouldn't it be great if washington, d.c. understood what you said that we should reward innovation, reward entrepreneurship instead of punishing them. you can't have capitalism without capital. that those who are most likely to invest should be encouraged to do so. what is wrong with them down there, ron? really. you know, to heck with the political regime change. do you know why? the american public is too smart to listen to all this drivel for as long as we have had to listen to it. that's my take. take your tea partiers, independents, people who voted for obama and are suffering buyer's remorse. they have to understand that this is america. we are an exceptional country.
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we should reward the ciscos of the world and the little ciscos we don't even know about. isn't that really the cutting edge issue here? >> well, you need what will bring us out of this crisis will be entrepreneurs putting stimulus in the hands of people, not stimulus in the hands of central government. hey, we're going to have a referendum in november. we'll see what happens. >> finally, ken, i know you dabble in the overseas markets. they have been doing great. the emerging markets have doubled. do you have thoughts or is the stronger dollar and the weaker euro sort of global signal that capital flows back into the united states? is that possible? >> i think the big surprise in terms of the strength and durability of earnings growth in the next several years is the united states. the good news on china is out. we know china and india and brazil have bright futures. people are worried about the united states. i think people are wrong. i think the united states will look stronger than people think
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now. it's going to be the big surprise. >> all right. you gentlemen are terrific to visit with us. thank you very much on the one-year anniversary of 70% in the s&p. almost 100% on the small caps. the best in 75 years. thank you very much. coming up, is washington enabling a new privileged and protected class? that's right. get this. gov government payrolls are expanding. federal compensation -- that's wages and benefits -- are nearly 50% above the private sector. and on top of all that, hill staffers are a bunch of tax cheats. now, something is seriously wrong with this system. we're going to talk to california republican congressman darryl isa about what needs to be done to fix it because this is as much as anything else part of the revolt against washington which is selling a product that no one around the country wants to buy. you're watching cnbc. we are first in business worldwide.
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. so the u.s. bureau of labor statistics says government payrolls are expanding and compensation is 50% above the private sector. the irs says hundreds of capitol hill senate staffers don't pay their taxes. there is something wrong with the system. have federal employees become the new protected class? well, cnbc's hampton pearson joins us with the details. an outragement. >> absolutely. first they owe billions in back taxes. 276,000 current and retired federal employees owe $3 billion including 100,000 on the payroll
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today. utah republican congressman jason chaffetz has a solution. >> if your a federal worker and you haven't paid taxes you ought to be fired. >> when it comes to jobs and benefits the federal government has been recession-proof. in 2008 the federal government said 224 billion dollars on compensation for some two million civilian employees. a usa today analysis shows 80% of the workers earned higher salaries than private sector counterparts. just under $68,000 for government employees versus $60,000 in the private sector. the gap explodes when you factor in pension and health care benefits. yearly $41,000 for federal workers versus under $10,000 in the private sector. a recent government study disputes that saying federal pay on average is 22% less than private sector and varies widely depending on what part of the
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country you live in. >> a lot of folks are looking at the size of the federal workforce. it's the same as it was in 1967 despite the fact that we have over 100 million more americans. >> however with trillion dollar deficits on the horizon, the size, affordability and sustainability of the government is moving to the front burner. larry? >> that guy may be right, hampton. i would have to look at it in terms of the total workforce. he's probably talking civilian workforce, not military. what he neglected to say is the explosion of salaries and especially benefits. that's what he neglected to say. that's the key point here because these government workers have a lot more job security than their brethren in the private sector. whatever happened to public service? you're supposed to take the pay cut because you get the better security and it's supposed to be a noble profession. >> you know that's always been part of the sell and the part of, you know, government employment.
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you will make less money but we'll take care of you on the benefits side. i think that's going to be tested in the future. >> all right. this is going to be a big brouhaha. hampton, great report. can't say it better myself. in fact, i have and i will continue to say it. we have darrell issa from the great state of california who knows something about these benefits and serves on the oversight and government reform committee which has jurisdiction over tax cheats. before we begin here's sna mitch mcconnell said today about government jobs. take a listen. >> we have had 120,000 government jobs by borrowing money from our grandchildren to hire government workers today. it's interesting to note that the average salary for government employees is now $70,000 a year. for private sector employees it's $40,000 a year. we have had an explosion of jobs in washington paid for by
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increasing the debt on our grandchildren while everyone else is shedding jobs the federal government is adding jobs. >> you know, mr. issa, first of all i'm glad to see that leader mcconnell is on this. we have been crusading on this for four or five shows. we had young jason chaffetz on wednesday or thursday. he did a great job. i know you are part of the revolution. the thing that blows me away, you know, the government unions, the sciu and the aflcio looks like they will do to the pax pair what the private sector union counterparts did to gm, chrysler, u.s. steel. you know the story. that's got to be part of this. >> absolutely. ever since john f. kennedy signed the unionization order in '62, the federal workforce has gone from being secure but behind the private sector to
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being equally or more secure and way in front in pay and benefits. unfortunately when they try to defend that the federal workforce is the same size as it was then, larry, they're saying you downsize the military and d.o.d. civilian and up size the rest. it's not a fair comparison. if you take the military and the cold war and put it into a separate pail they have shrunk, but government overall has increased. that's the dirty secret. the kind of government excesses at a time when every other industry has used computers and technology to downsize these tasks, we have actually not done it. that's win of the tragedies plus our contract workforce has grown. that's a reason the budget is so bloated. >> by the way, hats off to this usa today reporter for doing the job. he did the comparables. we have some comparables. we'll put them on the full screen. take a quick look to see exactly how much the public sector makes over the private sector.
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now, there's some. janitor, $30,000 versus $24,000. secretaries, $44,000 versus $33,000. nurses, $74,500 versus $64,000. i don't see clergy. that's my favorite. government clergymen make two or three times what the private sector makes. we all should have gone into the priesthood for the federal government. there is talk now, mr. issa, democrats and republicans, possibly a congressional pay cut of 5% or something like $8,500. that's a small start. what do you make of it? >> certainly you would be in line with the suffering of the private sector, but the truth is what we should have done is we should have frozen or deferred all federal workforce increases including our own until we got back to some semblance of, quote, a balanced budget. we can't have these kinds of stimuluses increasing our own pay, increasing through the stimulus state and local
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workers' pay and benefits while people are losing jobs in the private sector. that's what's happened under this administration. and it didn't start under this administration. the last administration did nothing to really reign in the growth of the government. they blame the war, but the fact is the supplementals allowed for a lot of growth that shouldn't have been allowed. >> is the pay cut idea going any place? >> i doubt it. to get us to vote against our own pay increase is an annual fight. to lower the pay is unlikely, but it should happen. if you were to go to outside sources and say, we want you to send an up or down recommendation of what congress is worth i don't have a question that we would be on the downtrend in the recommendations, big time. >> all right. let's review the bidding n. the last two years of the terrible recession we have had close to 100,000 new government jobs, point one. number two, their average compensation is running over 50%
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above their private sector counterparts. number three, mr. issa, i want to get to this in the last moments, house and senate staffers are tax cheating their little keisters off left and right. we have back data that it's even worse. i thought it was $5 million or $10 million, but it ease $3 billion over time. can you and otherses put them in jail, prosecute them? because this is the most outrageous of an incredibly outrageous overall story. >> larry, you're right. in our committee when jason offered an amendment, republicans all backed him. democrats actually shut down -- completely shut down the mark-up of a bill when we insisted that tax cheats within the federal work force, if they weren't making restitution would be eligible to lose their job though we had hardship carve-outs and everything, they wouldn't do that. it was so biased in protecting
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the federal workforce, even when they are cheating. remember, they do take a little bit of a lead. they start with tim geithner and charlie rengel and keep coming down the workforce. >> i'll tell you this, sir. this is a tea party yeissue, an independents issue, a democrat and republican issue. this is a major election year issue. this is a corrupt outrage out of washington, d.c. i hope you carry the ball on this and everybody does. congressman darrell issa, thank you very much for joining us. coming up tomorrow, i will sit down with karl rove, the former top adviser to president bush. he has a new bok out. we'll talk taxes and spending and whether george bush wasn't right about the iraq war. we'll talk about the future of the republican party. that's karl rove coming on tomorrow evening. by the way, i'm going to stay with this federal workforce outrage and tax cheat outrage.
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i'll stay wit. we started last week on "the kudlow report." we'll try to get more guests to talk about this until there is some action. this is an amazing, amazing issue. the government workforce is rising. we lost 8.5 million in the private work force. 50% better for the federal government and they don't pay their taxes. coming up this evening, yesterday's runaway prius dramatically underscored toyota's continuing problems. how much of the recalls and lost trust cost the beleaguered car company? cnbc's phil lebeau joins us with the dollars and cents when we return. toyota is bad, but the federal work force and tax cheat question is even worse, folks. i'm kudlow. stay with us, please.
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a runaway prius reportedly accelerated on its own yesterday down a san diego highway. how much of this and all of toyota's other problems will cost the big car company. well, phil lebeau has the full report. hello, phil. >> reporter: hey, larry. we told you about the story last night and we have a newest mat in terms of how much this is expected to cost toyota. we'll talk about it in a little bit. first, listen to the description of the prius owner describing what it felt like as his toyota was axccelerating out of his control on the california highway. >> there were a few times i got really, really close to
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vehicles, especially a truck twice. once early in the game and then another one when he was on the side of me. came real close. >> reporter: two investigators from the national highway traffic safety investigation and engineers from toyota are now looking at the prius. the car hit a top speed of 94 miles per hour and was going at an uncontrolled pace for more than 30 miles. it was ultimately stopped once a california highway patrolman pulled alongside the prius using his p.a., he told the driver to use regular brakes and his emergency brakes. here's what the highway patrolman saw and smelled as he pulled up to the prius. >> i was getting up to the car when i saw him i could smell the brakes. i saw his brake lights coming on. >> reporter: so what kind of problems have we seen with the 2008 prius? well, 48 complaints have been filed with the national highway traffic safety administration of people having speed control issues.
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however, this vehicle is not part of the gas pedal recall. the floor mats have been recalled as part of the recall of 5.3 million vehicles where the floor mats might become lodged underneath the accelerator pedal. they don't yet have a fix in terms of a remedy for the floor mats. i have a newest mat tonight in terms of how much this recall, the litigation, the court cases, the incentives to lure back buyer, how much it will cost toyota. we said $2 billion. that was a few months ago or a month ago. now the estimate is at least $5 billion. i'll tell you what, larry. i talked to some analysts who say they think it's low. that it has to go higher. >> hey, phil. on top of this, you're saying it's not the gas pedal and it might be the floor mat. what i hear you inferring is it might be some new problem besides the floor mat that they haven't uncovered yet. >> well, that's the suspicion. is there something else? is it in the electronics?
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is it within the software of the vehicle? toyota has said time and again that it looked at the electronics, it has had outside firms look and the electronics are not the issue. that said, you can bet that nhtsa and toyota engineers will be looking at the electronics of prius. i'm not sure they will find anything, but they will be looking. >> thank you very much, phil. coming up in "the kudlow report" does banking regulation fail the too big to fail test? we'll ask bob corker, one of the lead negotiators when "the kudlow report" comes right back. please stay with us.
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as you know, financial regulation deal is cooking in the senate, but does it fail the too big to fail test? well, nobody better than one of the lead negotiators. i'm joined by republican senator from tennessee bob corker. he serves on the senate banking committee and has become one of the keys. thank you for coming back, sir. >> good to be with you. >> i'm worried about too big to fail and consumer protection. i know you will give me the answers. tell me about too big to fail. there arer a lot of free market people, including myself, including a lot of free market tea partiers saying, you know
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what, there's $4 trillion of so-called resolution money in the house bill, the barney frank bill that will be used for bailout nation rather than to let failed banks fail? what can you tell us about the senate side? >> they need to be thinking the opposite. our goal from day one is to make sure if an institution fails out of business, it fails. mark warner and i have been joined from day one on that. just the opposite. if a company fails, the bankruptcy would be a better course of action than what the resolution process that we put in place would be. so just the opposite. we want to make sure that's not the case. >> wait a second. let me make sure i understand this. you want to make sure it doesn't go into bankruptcy and goes into the government resolution that will keep it afloat? >> no. we always want bankruptcy to be the default mechanism. in fact, that's the place where
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financial institutions expect to be. if there is an issue that appears it will pose systemic risk there is the possibility to resolve it out of business where in essence the company, the shareholders and unsecured debt and all those people are basically gone. but there is a mechanism, if it does pose a risk, to use an fdic-like mechanism to unwind them. so it's a hybrid. >> does that unwind -- i don't mean to interrupt. i guess i'm trying to narrow this thing down so we can understand it. when you say "unwind it" is this like fannie mae and freddie mac which may not be unwound in my lifetime or anyone's lifetime or your grandkids' lifetime, or do you mean you will have some kind of safety net financing but put it in the bankruptcy court? it's this $4 trillion in the house bill that's got everybody royaled up, sir. >> i can't speak to the house
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bill. if i spent time on the house bill we wouldn't get the senate bill done. what i can say is people should not be concerned about any type of bailout. i think that's the strongest piece of the bill. that is the fact that that type of vocabulary will be expunged from our american vocabulary, anyway in the hope that that will happen around the world after we put this in place. >> so is there any money in the senate bill that might be comparable to the $4 trillion in the house bill? >> i'm not familiar with the house bill, but we want to make sure that anything that occurs, that industry pays for it. that industry pays for it. and so i don't want to get into a lot of details because i have agreed not to speak specifically about what we are doing. we want to make sure taxpayers are not at risk. >> you could slap a bank tax on and then create a pool of money in the federal government that would effectively be the same bailout nation as the house bill.
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that's what it sounds like. >> i wouldn't be jumping to any conclusions. so, you know, let me say this, larry. we'll be unveiling this in the near future. i think it will pass the test of people who are concerned about us, quote, being bailout nation. i think they will see what we have done is something i wish we had in place a year and a half ago where, in essence, instead of companies that get in trouble going on their merry way there was pain involved in it. in our case they would be out of business. i think a great example would be to look at, you know, this is not a perfect scenario, but look at the 250 banks that probably will fail this year. they're toast. they're gone. they're out of business. think of that when you think about the type of resolution process we're looking at. >> what worries us is those are piggy banks, not the big guys.
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the big guys are the ones granted special privileges. >> mm-hmm. what i would say, larry, is don't worry. we're going to have a bill. it's going to come out soon and, you know, people can hype up various aspects if they wish. i think the best thing to do would be to see the legislation, certainly when it comes out i'm sure there will be flaws that will h need to be corrected in committee and on the floor. i think we have done a great job with the number one goal meaning we stop in this country talking about any company being too big to fail. i think this bill accomplishes that and i'm proud of that as a matter of fact. i hope we are able to see this through and actually come to an agreement soon where we can talk about this in greater detail. >> i appreciate that. thank you for your explanation. let me move on to consumer financial protection. senator chris dodd gives a statement on national public radio. he says he -- and he mentions you -- i guess he's your new
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best pal. he says you are creating an independent autonomous rule-writing entity unlike we have ever had before. so that has triggered a rash of conservative bloggers who are now, shall we say, criticizing you, if you will. i'm sure you have seen some of this on the various websites. >> yeah. >> let me just ask you -- this consumer financial protection agency. is it going to affect nonbanks? here's what they are asking. you can answer it directly. stores and layaway plans, check cashing companies, payday lenders, debt settlement companies, car dealers, pawnshops. people are worried this regulatory agency will cut off credit for main street in these areas. can you help us on that? >> well, i wouldn't describe the bill the way chris did. or at least the discussions around consumer, but i will say i think we have reached a good balance. the fact is we don't want
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regulation trumped. we want the safety and soundness of the financial institutions and the financial system are what is of utmost importance. if i talk much more deeply about it i may be getting into some details that i would rather leave until monday or tuesday or whenever the chairman decides to unveil the bill. i think we have struck a balance that we have been checking in obviously with numbers of republicans that are conservatives like me. i think we have reached a level of comfort about what this thing may do and what it may not do which is very important. we'll see where it goes. >> what about the nonbank operations? these are like little main street operations which is where this comes from. i'll just say, look, payday lenders, debt settlement companies or car dealers. will they be affected by the so-called consumer financial protection which many fear will cause a shut-down of credit.
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car dealers, payday lenders. take those. >> i think there is -- again, i'm not going to get into details, but i think there is an issue on rules applying across the board, but not -- the enforcement mechanism and all of those really things would be very different in each case. i'll just leave it at that. we'll talk more fully about it when there is actually a bill to talk about. >> all right. i appreciate that. >> let me say this. this thing is still in a state of flux. there are some administrative issues that we are trying to work through at present. you know, i just left a long, long meeting. our staff will be working. it's been almost a 24 -- in many cases it's been a round-the-clock effort. larry, what's happening is we are beginning because of programs like this with people like you that we respect and trying to answer questions, what's happening is a lot of speculation is happening. some of the bloggers that you
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mentioned are reading things into what's being said that, you know, may or may not apply. i think it would be best for everybody to chill out. let's let the bill come out. we're going to do this in obviously a public way. there will be committee meetings and people can applaud, take shots or do whatever they wish at that time. i think all this wringing of hands today probably doesn't do a lot of good. >> well, you know, i know you're aware that some of your tennessee tea partiers are up in arms, real worried about it. why not put it on c-span? let everybody look at it? >> or put it on kudlow. it would be good for ratings. i don't know. it's dull work. >> i'm not sure it would be good for ratings but we would be glad to host it on "the kudlow report." why not? >> what would you like to put on? >> i want to know about too big to fail. if you want free market solutions, sir, and we have talked about it through these many months, right into bankruptcy. i'm a believer in friedman and
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others. the great part of american free market capitalism, you can succeed beyond your wildest dreams but maybe more importantly, you have the right to fail. a lot of americans say, you know what, sometimes failure is part of the medicine. >> i couldn't agree more. as a guy who has laid in bed for a year and a half at length trying to make sure i could pay all the folks back i owed especially during the 1990-1991 recession, i did it and on time, i want them to live through those things like all of us ordinariry citizens have had to do in the past. couldn't agree more. >> i'm with you. under different circumstances, i have been in exactly the same boat. i understand what that means. you know, i think a lot of ordinariry folks do, too. they just don't like the idea of giving wall street another bailout. >> yeah. please do not characterize what we are doing as a bailout or you will be way off base, i promise you.
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>> senator corker, because of my respect i will withhold judgment. we appreciate you coming on. i want to hear what happens when the final product comes out, sir. >> thank you. we will be doing it publically when it occurs. thank you very much. >> thank you, bob corker of tennessee. coming up, cisco unveils a new high speed router. is it a game changer for tech? is it american innovation? should we reward them rather than punish them with higher taxes? "the kudlow report" is coming right back.
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all right. now here's a great american entrepreneurial story. cisco. it revealed plans today for a new high speed router it said will be a total internet game changer. i want to know if it will revolutionize the internet as cisco suggests. joining me now is the managing director of formula capital. good to see you, james. >> good to see you, larry. >> i want to believe this because i desperately am looking for innovation in technology. do you buy the cisco story? >> i do. basically this is going to create the dream for us. we all have a dream of being on the internet all the time everywhere at the highest speeds imaginable. imagine you're anywhere you want to be and you could download any movie, have video calls, conferenci
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conferencing. this is a game changer. it will create the internet we have been looking for for 20 years. >> basically, this is like massive bandwidth power. and we're going to speed up everything. maybe even the dopey computers in the cnbc news room which take 25 minutes to print out anything. is that what's happening here? cisco has a magic gizmo? >> you may not need the full computing power on those computers. all the computing will be in the cloud since it will be connected to you all the time at high speeds. your data, movies will be there. all of your print jobs will be there. it will be a game changer. for me, this is similar to microsoft introducing windows 95. i think it will be that kind of a game changer over time. >> this is great. we haven't had one of these in a while. the cynics on wall street and pes michigasimists who want to bearish say the stock went down because they overpromised but the stock has been runninging up
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on the expectation of the announcement. wasn't this a classic case of buy the rumor and sell the fact? >> absolutely classic. okay. everybody wanted cisco to introduce a new iphone. they don't make iphones. but they do make a device to speed up the internet by a factor of ten to a hundred. maybe the first thing you will note is you can make a phone call using an at & t phone in new york city. that network needs a device like this. in the next five years you will see enormous changes all over the u.s. >> thank you very much for that rundown. really terrific stuff and very optimistic. tomorrow night, folks, be sure to join us. we will be joined by nationally indicated radio host and my old and great friend lou dobbs. we'll make music together on "the kudlow report" and help critique the karl rove interview
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as he talks about the bush years. lou is a great pal. i hope you come back with us. coming up, my last word. (announcer) if you want directions to the stadium, push here. if you want to see the weather ahead, push here. if you want to access 10 gigs of music you just downloaded to your hard drive, push here. and if you want to pull away from it all, you can push here. the all-new-40-gig hard drive nav and entertainment system on the 2010 lacrosse. from buick. it's the new class of world class.
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i'm going to talk to karl rove tomorrow about war and taxes. and lou dobs will be here to talk about it with me. please, join us tomorrow night.
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hi, ellen! hi, ellen! hi, ellen! hi, ellen! we're going on a field trip to china! wow. [ chuckles ] when i was a kid, we -- we would just go to the -- the farm. [ cow moos ] [ laughter ] no, seriously, where are you guys going? ni hao! ni hao! ni hao! ni hao! ni hao! ni hao! ni hao! ni hao! ni hao! ni hao! ni hao! ni hao! [ female announcer ] the new classroom.
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see it. live it. share it. on the human network. cisco.


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